Canadian Officials Under Fire for Enbridge Pipeline Approval

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OTTAWA—Under attack from opposition politicians, environmentalists and aboriginal groups for giving Enbridge Inc. the green light to build a pipeline linking the Alberta oil sands and the Pacific Coast, Canada’s top officials said Wednesday it was up to the company to meet a series of conditions before construction could begin.

Canada on Tuesday approved Enbridge’s Northern Gateway project, which would carry 525,000 barrels a day of crude oil from near Edmonton, Alberta, to a marine terminal in Kitimat, British Columbia, where the oil would be loaded onto tankers bound for Asia.

The decision supports the Conservative government’s aim of encouraging development of the country’s natural resources, and finding new markets for energy products at a time when demand from the U.S., the biggest importer of Canadian crude, could wane due to the shale boom.

In the Canadian Parliament, Prime Minister Stephen Harper defended the decision Wednesday, saying it was contingent on Enbridge satisfying 209 conditions set out by the country’s main energy regulator before construction begins. After 18 months of hearings, the regulator, the National Energy Board, said last December the project’s potential benefits to the economy “outweigh the burdens and risks” posed to the environment.

“The fact of the matter is that the government is acting on the advice of an independent scientific panel that thoroughly reviewed these matters,” Mr. Harper said. “The government has applied the conditions demanded by that panel. It is now up to [Enbridge] to assure the regulator going forward that it will indeed comply with those conditions.”

Finance Minister Joe Oliver said separately that finding new energy markets for Canadian resources continued to be among the top priorities for policy makers, saying failure to do so could apply downward pressure on the price for western Canadian crude, which trades at a “significant” discount versus other benchmark blends.

“We could see a decline in the level of revenue, and there’s a cost to the Canadian economy,” he said at a news conference.

The leaders of Canada’s two main opposition parties have vowed to overturn the Conservative government’s decision on Gateway if elected into power after next year’s election, arguing the project represents too much risk to the coastal environment and economy of British Columbia, the country’s westernmost province.

The government of British Columbia has imposed its own set of conditions—five in all, dealing with the environment, addressing aboriginal concerns and financial compensation—before it is prepared to issue permits to allow digging for the pipeline.

“Our position on the Northern Gateway pipeline remains unchanged,” British Columbia Environment Minister Mary Polak told reporters after the decision was issued, which she termed “not a surprise.”

The B.C. government’s first criteria called for the blessing of the joint review panel set up by Canada’s National Energy Board, which was issued in December. The others include improved land and marine oil-spill prevention programs, a “fair share” of economic benefits for the province and consultations with aboriginal groups. “There are still four remaining conditions that need to be completed,” Ms. Polak said.

Investors largely shrugged off news Wednesday of the Canadian government’s approval for the project, recognizing Enbridge must address concerns posed by regulators, the British Columbia government and aboriginal groups before it is allowed to begin construction. Enbridge shares fell 45 cents in trading in New York, closing Wednesday’s session at $47.35, on slightly greater-than-average volume.

Environmental groups and aboriginals argue Gateway will never get built, given the stiff opposition in the province, and have vowed to go to the courts to stop Enbridge. In a sign of the tension ahead, a group of protesters issued a statement saying it staged a peaceful sit in at the British Columbia office of a senior Conservative lawmaker, James Moore, to exhibit opposition to the pipeline project.